Glossary: Real Estate Terms

REAL ESTATE TERMS 

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Abstract of Title:  A public records summary that relates to the title of a specific piece of land.  Title insurance companies and attorneys review the records summary to determine if there are any title defects that must be cleared before a buyer can purchase clear, marketable and insurable title.
Acceleration Clause: A clause in a mortgage document that may require the loan balance to become due immediately.  This condition usually applies if regularly scheduled mortgage payments are not made or if there's a breach of other mortgage conditions.
Acceptance: A consent to enter into a contract and be bound by the terms of the offer.
Additional Principal Payment: A payment by a borrower of more than the scheduled principal amount due in order to reduce the remaining balance on the loan.
Adjustable-Rate Mortgage (ARM):  A mortgage with an interest rate that is periodically adjusted by the lender based on a specified index.  Also known as a variable rate mortgage.  These types of mortgage products typically start with a lower interest rate, then the interest rate may move up or down as the index changes.
Adjusted basis: The original cost of a property adding the value of any expenditures for improvements to the property deducting any depreciation taken.
Adjustment Date: The date on which the interest rate changes for an adjustable-rate mortgage (ARM).
Adjustment Period:  The period that elapses between the adjustment dates for an adjustable-rate mortgage (ARM).
Affordability Analysis: A detailed analysis of your ability to afford the purchase of a home.  An affordability analysis takes into consideration your income, liabilities, and available funds, along with the type of mortgage you plan to use, the area where you want to purchase a home, and the closing costs that you pay.
Agreement of Sale: A contract in which a seller agrees to sell and a buyer agrees to buy, under specific terms and conditions specified in writing and signed by both parties.  Also known as a Contract of Purchase, Purchase Agreement or Sales Agreement according to location or jurisdiction.
Amenity:  An appealing or desirable feature in a property.
Amortization:  The gradual repayment of a mortgage loan by periodic installments.
Amortization term: The amount of time required to amortize the mortgage loan. The amortization term is expressed as a number of months.
Amortize: To repay a mortgage with regular payments that cover both principal and interest
Annual Mortgagor Statement: A report sent to the mortgagor each year. The report shows how much was paid in taxes and interest during the year, as well as the remaining mortgage loan balance at the end of the year.
Annuity: An amount paid at other regular intervals, often on a guaranteed dollar basis.
Application: A form used to apply for a loan and to record relevant information concerning a potential mortgagor and the proposed security.
Appraisal: An expert judgment or estimate of the quality or value of real estate as of a given date.
Appraised value: An estimation of a property's fair market value, based on an appraiser's investigation of the property.
Appraiser:  Licensed person who prepares an appraisal, which is a report of the value of a property.
Appreciation:  Increase in the value of real estate over time.
APR (Annual Percentage Rate: The cost of a mortgage stated as a yearly rate; includes such items as interest, mortgage insurance, and (points).
ARM:  Short form for adjustable-rate mortgage.
Assessed Value: The valuation placed on property by a public tax assessor.
Assessment: The process of placing a value on property for the strict purpose of taxation. May also refer to a levy against property for a special purpose, such as a street assessment.
Assessment Rolls: The public record of taxable property.
Assessor: A public official who establishes the value of a property.
Asset: Anything of monetary value that is owned by a person. (property, personal property, bank accounts, etc.).
Assignment: To convey a mortgage or contract from one person to another.
Assumable Mortgage: A mortgage that can be transferred by the buyer when a home is sold.
Assumption: To reassign the seller’s existing mortgage to the buyer.
Assumption Clause: A provision that allows a buyer to assume responsibility for the mortgage from the seller (take over the loan).
Assumption Fee: The fee paid by the buyer to a lender to assume an existing mortgage.
Attorney-In-Fact: One who holds a power of attorney from another to execute documents for the grantor.


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Balloon Mortgage: A loan that has equal monthly payments that is amortized except that provides for a lump sum payment to be due at the end.
Balloon Payment: The final lump sum payment that is made at the end of a balloon mortgage.
Bankruptcy:  The financial inability to pay debts.  The debtor seeks relief through legal proceedings.
Beneficiary: The person designated to receive assets from a trust, estate, or a deed of trust.
Bequeath: Using a will to transfer personal property.
Bill of Sale: An instrument which transfers title to personal property (chattels); a "Deed" transfers real property.
Binder:  A preliminary agreement, frequently secured by the payment of earnest money, between a buyer and seller that serves as an offer to purchase real estate.  The agreement secures the right to purchase real estate upon agreed terms for a specific period of time.  Unless the agreement specifically provides that the earnest money is to be refunded, the earnest money is usually forfeited if the buyer's situation changes or is unable to purchase.  Also known as an Offer to Purchase.
Biweekly Payment Mortgage: A loan that requires payments to reduce the debt every two weeks (instead of the normal monthly payment schedule).
Blanket Insurance Policy: One policy that covers multiple pieces of property (or multiple people).
Blanket Mortgage: The mortgage that is secured by a total project, as opposed to the share loans on single units within the project.
Bona Fide: Honest, without fraud.
Blemish On Title: Conditions, typically revealed by a title search that adversely affect the title to real estate. Blemishes on title can interfere with the transfer of real estate because they generally cannot be removed except by court action, quitclaim deed, or release.
Breach: To violate a legal obligation.
Bridge Loan (Swing Loan): A form of second trust that uses the buyer’s existing home as collateral in a manner that allows the funds to be used for closing on a new house before the existing home is sold.
Broker: An individual who, for a fee or commission, brings together parties and facilitates business negotiation between them.  See also Mortgage Broker and Real Estate Broker.
Builder Registration:  Builder requirement that buyers and their sales professional register with the builder before or in the early stage of the new home selection process.
Building Code: Local and state regulations that control design, construction, and materials used for a building project.
Buydown Your Mortgage:  Paying additional points to your lender at closing in exchange for a reduced rate of interest.  The reduced rate may last for the entire or a portion of the loan life. Also see Points.
Buyer Representation: Describes the relationship between the sales professional performing real estate services for a buyer.  The sales professional places the interests of the buyer above all others in the transaction.
Buyer Representation Agreement:  Formal contract signed by the buyer and sales professional which details the sales professional agreement to represent the buyer.
Buyer's Market:  There is a greater supply of homes than there are buyers to purchase them.
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Call Option: A provision in the loan that gives the lender the right to call the loan due and payable at the end of a specified period for any reason.
Cap:  Limit on the amount a rate or payment can increase in any one specified adjustment period.
Capital Expenditure: The cost of an improving a property to add to its value.
Capital Gain (Capital Improvement):  Increase in the value of real estate between the time it was bought and the time it was sold.
Cash-Out Refinance: When property isrefinanced and the borrower receives additional cash that can be used for any purpose.
CCR (Covenants Conditions and Restrictions): A document that controls the use, requirements and restrictions of a property.
Certificate of Eligibility:  A certificate provided by the Veterans Administration (VA), which verifies the veteran's eligibility to receive a VA loan.
Certificate of Title: A document signed by a title examiner or attorney stating that the seller has a good marketable and insurable title.
Chain of Title: A history of all of the documents that transfer title to real property, from the earliest document through the most recent.
Change Frequency: How often payments and/or interest rates change in an adjustable-rate mortgage (ARM).
Change Orders:  Changes to the plans or specifications defined in original construction documents, which the buyer makes after construction starts.  Typically, these changes are in writing and are signed by the builder and buyer.
Chattel: Personal property.
Clear Title: Title that has no liens or outstanding issues as to ownership of the property.
Closing:  A meeting where the sale of a property is finalized by the buyers and sellers signing certain documents to transfer the title of the property and paying closing costs.  Also known as the Closing Day or Settlement. Also see Closing Day and Settlement.
Closing Costs:  Certain expenses (over and above the property price) incurred by both buyers and sellers when transferring ownership of real property.  Typical closing costs may include: attorney's fees, a loan origination fee, various taxes, and an amount held in escrow, along with charges for obtaining title insurance and a survey as needed.  The percentage of closing costs varies according to the area or jurisdiction.  Often, lenders provide estimates of closing costs to prospective home buyers.
Closing Day:  The day specified in a real estate contract when the sale of a property is finalized by the buyers and sellers signing certain documents to transfer the title of the property and paying closing costs.  Also see Settlement or Closing.
Closing Statement: The computation of financial adjustments between buyer and seller as of the day of closing a sale to determine the net amount of money which buyer must pay to seller to complete purchase of the real estate and seller's net proceeds.  Also called: settlement sheets and HUD-1.
Cloud on Title: A condition usually revealed by a title search that negatively affect the title to real estate. Clouds on title can interfere with the transfer of real estate because they generally need to be removed by court action, quitclaim deed, or release.
CMA:  Stands for comparative or competitive market analysis.
Coinsurance: The sharing of insurance risk between the insurer and the insured.
Coinsurance Clause: The provision within a hazard insurance policy which states the amount of coverage that must be maintained in order for the insured to collect the full amount of a loss.
Collateral: An asset used to guarantee the repayment of a loan.
Collection: Act used to make a delinquent mortgage current. Can proceed to foreclosure.
Co-Maker: An additional signer on a loan with the borrower. Borrower and Co-Maker are equally responsible for repayment.
Commission:  Payment to a real estate broker for services that were supposed to be performed.
Community Property: Property acquired during a marriage is deemed jointly owned, unless acquired separately.
Commitment Letter:  A written offer or notification from a lender stating the terms under which it agrees to lend money to a home buyer.  Also see Loan Commitment.
Competitive Market Analysis (CMA): A report comparing your property to others in your market that recently sold.
Complement of Services:  A quantity of real estate settlement services considered to complete a real property purchase.
Comparables (Comparable Properties): Properties used to compare with a specific property, usually for an appraisal.
Compound Interest: Interest paid on the original principle balance, accrued, and unpaid interest.
Conditional Offer:  A purchase agreement submitted to the seller that stipulates one or more requirements to be met before the purchaser is obligated to buy the property.
Condo/Condominium: Individually owned units in a multi-unit structure. Stairs, sidewalks, and hallways are common areas.
Construction Financing (Construction Loan):  Short term funds used to pay for the construction of a home.
Contingency: A condition that must be satisfied before a contract is binding. For instance, a sales agreement may be contingent upon the buyer obtaining an acceptable inspection.
Contract of Purchase:  A contract in which a seller and buyer agrees to transfer property, under specific terms and conditions specified in writing and signed by both parties.  Also known as an Agreement of Sale, Purchase Agreement or Sales Agreement according to location or jurisdiction.
Contractor:  One that contracts to furnish specific materials and/or perform services at a specified price, especially for construction work or development of a property.
Contract-to-Release:  Stage of new construction between the time the final contract is signed by the builder and the buyer, and the time the home is released for construction.
Conventional Loan:  A loan that is not insured or guaranteed by the federal government, such as the Veterans Administration or the Federal Housing Administration.  Also see Conventional Mortgage.
Conventional Mortgage:  A loan that is not insured or guaranteed by the federal government, such as the Veterans Administration or the Federal Housing Administration.  Also see Conventional Loan.
Convertibility Clause: Allows borrowers to change from an adjustable-rate mortgage to a fixed-rate after loan starts.
Convertible ARM: An adjustable-rate mortgage that can be changed to a fixed-rate mortgage.
Counter:  Rejection of an offer in written terms which a buyer or seller proposes a substitute offer to the contract terms.
Covenant: A statement in a loan requires or restricts the borrower.
Credit Report (Credit History):  Summary of a buyer's debt, borrowing, and repayment history compiled by a credit-reporting agency.
CRV (Certificate of Reasonable Value):  A document that establishes the maximum value and loan amount for a VA guaranteed mortgage.
Credit Life Insurance: Insurance used to pay off mortgage upon borrowers death.
Creditor: Someone who is owed money.

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Deed:  A written document that is properly signed and delivered as an instrument of bond, contract, or conveyance, especially relating to property.  This document transfers property ownership from one owner to another.  The seller signs the deed at closing and the buyer receives a copy.  The deed should be recorded with the buyer listed as the new property owner.  Also (Conveyance).
Deed-in-Lieu (Voluntary Conveyance): Deed given to lender from borrower to avoid foreclosure.
Deed of Trust:  A document used in some states instead of a mortgage. Like a mortgage, a security instrument whereby real property is given as security for a debt.  When borrowers sign this document, they receive title to the property but convey title to a neutral third party, called a trustee, until the loan requirements are satisfied.
Deed of Trust Note: A written agreement to repay a loan.  The agreement is secured by a mortgage, serves as proof of an indebtedness, and states the manner in which it shall be paid.  Also see Mortgage Note.
Default: Failure to comply with requirements of mortgage.
Delinquency: Failure to make payments when they are due.
Demographic Data:  Information pertaining to characteristics of human populations and population segments, including population growth and density.
Deposit: A deposit given to a third party by the potential buyer upon signing the agreement of sale. The deposit shows that the buyer is serious about buying the property, an expression of good faith. If the sale goes through, the earnest money is applied against the down payment. If the sale does not go through, the earnest money is forfeited or lost unless the binder or offer to purchase expressly provides in writing that it is refundable. Also see Earnest Money and Earnest Money Deposit.
Designated Dual Agent:  Real estate sales professionals who work for the same company where one is assigned to work with the buyer and the other is assigned to work with the seller in the same transaction.  In such a transaction, there are two designated sales professionals in the same firm: one for the buyer and one for the seller.
Disclosure:  A document, text, or form that reveals or uncovers information about real estate.  For an example, see Seller's Disclosure.
Discount Point:  Percentage of the buyer's loan usually paid by the seller to the lender in cash at closing.  Each point equals 1% on the loan balance.  Discount points account for the difference between the market interest rate and the loan rate.
Documentary Stamps: A state tax, in the forms of stamps, required on deeds and mortgages when real estate title passes from one owner to another.  The amount of stamps required varies with each state.
Down Payment: The part of the purchase price that is not financed.
Dual Agent:  The real estate sales professional who has signed agreements with the buyer and the seller in the same transaction.
Due-On-Sale Clause: An acceleration clause that requires full payment of a debt when the secured property changes ownership.

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Earnest Money:  A deposit given to a third party by the potential buyer upon signing the agreement of sale.  The deposit shows that the buyer is serious about buying the property, an expression of good faith.  If the sale goes through, the earnest money is applied against the down payment.  If the sale does not go through, the earnest money is forfeited or lost unless the binder or offer to purchase expressly provides in writing that it is refundable.  Also see Deposit and Earnest Money Deposit.
Earnest Money Deposit:  A deposit given to a third party by the potential buyer upon signing the agreement of sale.  The deposit shows that the buyer is serious about buying the property, an expression of good faith.  If the sale goes through, the earnest money is applied against the down payment.  If the sale does not go through, the earnest money is forfeited or lost unless the binder or offer to purchase expressly provides in writing that it is refundable.  Also see Earnest Money.
Easement Rights:  A right, interest, or privilege provided to persons other than the owner granting access to or over a property.
Effective Age: Appraiser’s estimate of the age of a building.
Encroachment: An improvement such as a building, or portion of a building, or an obstruction that physically intrudes upon, overlaps or trespasses upon the property of another.
Encumbrance:  Any right or interest in land that affects or limits the fee simple title to a property, such as mortgages, easements, leases, or restrictions.
Equity:  The value which owner has in real estate over and above the debts against it.
Escrow:  Something of value, such as money or documents, put into the custody of a third party to be delivered upon the fulfillment of specified conditions.  For example, a buyer places a down payment in escrow with an attorney or title company to be disbursed when the transaction closes or a borrower places funds in escrow with a lender to pay taxes when they are due.
Escrow Money:  Funds held by a lender or service provider to pay for taxes, insurances, and other expenses as they become due.  Also see Escrow Payment.
Escrow Payment:  Funds held by a lender or service provider to pay for taxes, insurances, and other expenses as they become due.  Also see Escrow Money.

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Fannie Mae (Federal National Mortgage Association): A privately owned New York Stock Exchange corporation created by Congress to support the secondary mortgage market. It purchases and sells residential mortgages insured by FHA or guaranteed by the VA, as well as conventional home mortgages.  Also seeFNMA.
Fee Simple: An estate in which the owner has unrestricted power to dispose of the property as he wishes, including leaving by will or inheritance.  A person has 100% interest in the real estate.
FHA Loan:  A mortgage where the lender is insured against loss by the Federal Housing Administration (FHA).
FICO Score:  A computed score, based on information from a borrower's past credit, used by a lender to predict the likelihood that the borrower will repay a mortgage.
Fiduciary:  A person who acts on the behalf of others in a legal manner.
Fixed-Rate Mortgage (FRM):  A debt instrument in which the interest rate does not change during the entire loan term. Also see also FRM.
Fixture: What was previously personal property which is now permanently attached to real property and goes with the property when it is sold.
Flood Insurance: Insurance for property damage due to flooding. Required in some areas.
FNMA (Federal National Mortgage Association):  A privately owned corporation created by Congress to support the secondary mortgage market. It purchases and sells residential mortgages insured by FHA or guaranteed by the VA, as well as conventional home mortgages.  Also seeFannie Mae.
Foreclosure:  Legal loss of property because of non-payment of a mortgage.
FRM:  A debt instrument in which the interest rate does not change during the entire loan term.  Also see Fixed-Rate Mortgage.
FSBO:  Real estate language (fizz-bow), a short form that stands for "For Sale By Owner" is used to describe someone who is not working with a realtor to sell property.
Full Service Agent: A real estate office with licensed realtors for the purpose of listing homes for sale and representing buyers in real estate transactions.
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Gage (Open-End): A mortgage with a provision that permits borrowing additional money in the future without refinancing the loan or paying additional finance charges.  Provisions usually limit borrowing to no more than would raise the balance to the original loan amount.
General Warranty Deed: A deed in which the grantor fully warrants that title is free from defects, or does not have a blemish on title.  See Blemish On Title.  Commonly used in most real estate deed transfers because it offers the greatest protection of any deed.
Good Faith Estimate: Lender disclosure of credit terms and costs associated with a mortgage.
Graduated Payment Mortgage: A residential mortgage with monthly payments that start at a low level and increase at a predetermined rate.
Grantee:  A person who receives a conveyance of real property from a grantor.
Grantor:  The person transferring title to, or an interest in, real property to a grantee.
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Hazard Insurance:  A policy with coverage that compensates for physical damage to a property from wind, fire, vandalism, or other perils.  Coverage should be equal to at least the replacement cost of the property to ensure that the home will be fully rebuilt in case of a total loss.  Also referred to as Homeowner's Insurance.
Highrise:  A residential building equipped with elevators that exceeds six stories.
Home Builder:  A service provider that specializes in building new homes.
Home Inspection:  A thorough examination that evaluates the mechanical and structural condition of a property performed by a qualified inspector.
Home Inspection Report: A qualified inspector's report on a property's overall condition.  The report usually includes an evaluation of both the structure and mechanical/electrical systems.
Home Warranty:  A type of insurance policy that covers repairs to specified parts of a house for a specific period.  Also known as a Residential Service Contract.
Homeowner's Insurance:  A policy with coverage that compensates for physical damage to a property from wind, fire, vandalism or other perils.  Coverage should be equal to at least the replacement cost of the property to ensure that the home will be fully rebuilt in case of a total loss.  Also referred to as Hazard Insurance.
HUD:  A short form for the Department of Housing and Urban Development.
Index:  A market fund rate that may be tied to an adjustable rate.
Installment: The normal payment that a borrower has agreed to make to the lender.
Insurable Title: Property title that a title company agrees to insure.
Insurance: Contract for compensation due to specific looses.
Insurance Binder: A temporary insurance policy. A permanent policy needs to be purchased prior to the expiration date of the Binder.
Intangible Mortgage Tax: Tax based on the amount of the buyer's mortgage.
Interest: The amount charged by a lender for the use of money.

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Joint Tenancy: An equal undivided ownership of property by two or more persons.  Upon the death of any owner, the remaining owners take the decedent's interest in the property.
Judgment:  A legal claim filed against a person or property to repay a debt.

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Latent Defect: Unknown property defect not readily apparent to the buyer, but may surface later.
Legal Description: Property description recognized by law.
Lender's Inspection Fee: Fee charged by a lender to inspect the property to verify that required repairs are completed.
Lien: The legal right to take and hold or sell the property of a debtor as security or payment for a debt.
Liquidate:  Sell an asset and receive cash.
Listing Agent: The sales professional who has signed an agreement to exclusively market the seller's property.
Listing Agreement: Formal contract signed by the seller and the real estate sales professional at the time the seller places a property on the market.
Listing Commission: The percentage of the final home price sellers agree to pay a sales professional to list and sell their property.
                               (Not the HutHound Way!)
Listing Contract: Between a home owner and a licensed real estate broker by which the broker is employed to market the real estate within a given time for which service the owner agrees to pay a commission. Also see Listing Agreement.
Listing Fee: The percentage of the final home price sellers agree to pay a sales professional to list and sell their property.  
               (Not the HutHound Way!)
Loan Commitment: A written offer or notification from a lender stating the specific terms under which it agrees to lend money to a home buyer. Also known as a Commitment Letter.
Loan Processing: Verifying financial information provided by a borrower to a lender, packaging the information on standardized forms, and submitting the package to an underwriter for formal loan approval.
Loan-To-Value Ratio: The relationship between the amount of the mortgage and the appraised value of the property, the ratio is expressed as a percentage of the appraised value.
Loan Term: Maximum length of time within which a loan must be repaid.
Lock-in: A written agreement in which the mortgage lender guarantees a specified interest rate if the loan closes within a set time.
Lot Acquisition: Purchase of a lot for building a house on it.
Lot Survey: The report that includes a detailed map of an area of land, including its boundaries, area, and elevation, using geometry and trigonometry to measure angles and distances.
Lot-Land: An area of land with fixed boundaries.

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Market Analysis: A report comparing your property to others in your market that has recently sold.
Market Value: The highest probable price property would bring in an arm's-length transaction under normal conditions in an open forum. This is the basis for "listing price', or "asking price".
Marketable Title: Clear or good title, reasonably free from the risk of litigation over possible defects.
MIP: The amount paid by a mortgagor for mortgage insurance, to a government agency such as the Federal Housing Administration (FHA) or to a private Mortgage Insurance (MI) Company.  A short form for Mortgage Insurance Premium.
MLS: A short form for Multiple Listing Service. Data that combines the listings for all available homes in an area, in one directory or database.
MLS Number: A series of unique numerals used to describe an individual property in the Multiple Listing Service (MLS).
Mortgage: A temporary, lien or claim against real property given by the buyer to the lender as security for money borrowed.
Mortgage Broker: An individual or company that typically requires a fee or commission for the service of bringing borrowers and lenders together for the purpose of loan origination. See also, Broker and Real Estate Broker.
Mortgage Commitment: A written notice from the bank or other lending institution saying it will advance mortgage funds in a specified amount to permit a buyer to purchase real property.
Mortgage Company: A firm that is in the business of originating, servicing, and selling loans to investors.
Mortgage Insurance: A contract that insures the lender against loss caused by a borrower's or mortgagor's default on a government or conventional mortgage loan.  The contract can be issued by a private company or by a government agency such as the Federal Housing Administration (FHA). Depending on the type of mortgage insurance, the insurance may cover all or part of the mortgage loan.
Mortgage Insurance Premium (MIP): The amount paid by a mortgagor for mortgage insurance, either to a government agency such as the Federal Housing Administration (FHA) or to a private mortgage insurance (MI) company.  Also referred to by the short form MIP.
Mortgage Life Insurance: A type of term life insurance often bought by mortgagors. The coverage decreases as the mortgage balance declines. If the borrower dies while the policy is in force, the debt is automatically covered by insurance proceeds.
Mortgage Note: A written agreement to repay a loan.  The agreement is secured by a mortgage, serves as proof of an indebtedness, and states the manner in which it shall be paid.  Also see Deed of Trust Note.
Mortgage Product: Various types of mortgages.
Mortgage Provider: A company or person who supplies loan products.  See also Mortgage Company.
Mortgagee: A lender in a mortgage loan transaction.
Mortgagor: A borrower in a mortgage loan transaction.
Multi-Family: Residential structure with more than one dwelling.
Multiple Listing Service: The means by which members of a board share listing information and property details about a property with other members.

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Natural Hazard Disclosure: Report provided to the buyer from the seller which discloses whether the property is located in any areas that are at risk to natural hazards, such as flood, earthquake or forest fire.
Negative Amortization: Negative amortization occurs when monthly payments fail to cover the interest cost.  The interest that isn't covered is added to the unpaid principal balance, which means that even after several payments you could owe more than you did at the beginning of the loan.  Negative amortization can occur when an ARM has a payment cap that results in monthly payments that aren't high enough to cover the interest.
New Homes: Newly constructed homes that have not been previously owned.
No or Low Down Mortgages: Mortgages that require little or no cash down payment.
Note: Legal document describing loan.
Note Rate: Interest rate stated on Note.

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Offer Price: Price offered to the seller at the start of a negotiation.
Offer to Purchase: A preliminary agreement, frequently secured by the payment of earnest money, between a buyer and seller that serves as an offer to purchase real estate.  The agreement secures the right to purchase real estate upon agreed terms for a specific period.  The earnest money is usually forfeited if the buyer's situation changes or is unable to purchase, unless the agreement specifically provides that the money is to be refunded.  Also known as a Binder.
Origination Fee: Percentage (usually 1%) of the buyer's loan paid by the buyer in cash at closing.  This fee is limited to 1 percent of FHA and VA loans.

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PITI: Real estate industry language, a short form for Principal, Interest, Taxes, and Insurance.
Plat: A map showing actual or planned features, such as streets and individual building lots.
PMI: Short form for Private Mortgage Insurance. PMI is the amount paid by a mortgagor for mortgage insurance, to a government agency such as the Federal Housing Administration (FHA) or to a private Mortgage Insurance (MI) company.
Points: A one-time charge by the lender for originating a loan.  A point is one percent (1%) of the amount of the mortgage.
Power of Attorney: Legal document allowing a person to act on another person’s behalf.
Pre-Approval: Preliminary recommendation by a lender for a borrower's mortgage application at a certain maximum amount and rate.
Pre-Approved for Financing: Preliminary recommendation by a lender for a borrower's mortgage application at a certain maximum amount and rate.
Prepaid Interest: Interest collected at closing due from the day of closing until the first of the month.
Prepaid Items: Charges paid on behalf of the buyer at the time of closing that will be due later.  These include homeowner's association dues, insurance and tax reserves, prepaid interest, prepaid rent, security deposits and more.
Prepayment: Any amount paid to reduce the principal balance of a loan before the due date.  Payment in full on a mortgage that may result from the owner's decision to pay off the loan in full, a sale of the property or a foreclosure.  In each case, payment occurs before the loan has ended.
Pre-Payment Penalty:  A fee charged to a mortgagor who pays a loan before it is due.  This is not allowed for FHA or VA loans.
Pre-Qualification: Preliminary recommendation by a lender that a buyer will qualify for a specific mortgage amount based on information provided by the buyer alone and not verified through other sources.
Prime Rate: Interest rate lenders charge to preferred clients.
Principal: The mortgage loan amount borrowed or remaining unpaid.  The part of the monthly payment that reduces the remaining balance of a mortgage loan.
Private Mortgage Insurance: The amount paid by a mortgagor for mortgage insurance, to a government agency such as the Federal Housing Administration (FHA) or to a private Mortgage Insurance (MI) company.
Property Inspection: Refers to an inspection of property performed by certified property inspectors at the buyer's request. Typically, this inspection is done right after the property goes under contract.
Property Taxes: Fees levied against the owner of real property.
Property Type: A type of particular real estate or land.  For example, single family, vacant land, condominium, income property, townhouse, commercial, duplex, etc.
Prorate: To allocate between seller and buyer their proportionate share of an obligation paid or due. For example a prorate on real property taxes, fire insurance, or condominium fee.
PUD (Planned Unit Development): A zoning designation for property developed at the same or slightly greater overall density than conventional development, sometimes with improvements clustered between open, common areas. Uses may be residential, commercial or industrial.
Purchase Agreement: A contract in which a seller agrees to sell and a buyer agrees to buy, under specific terms and conditions specified in writing and signed by both parties.  Also known as an Agreement of Purchase, Agreement of Purchase, or Sales Agreement according to location or jurisdiction.

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Quitclaim Deed: A deed that transfers without warranty whatever interest or title a grantor may have at the time the conveyance is made. This deed only removes the grantor from rights to the property.
Realtor: A real estate sales professional required to abide by a code of ethics as a member of the local and state boards.
Refinancing: The process of the same mortgagor paying off one loan with the proceeds from another loan.
Regulation Z: The set of rules governing consumer lending issued by the Federal Reserve Board of Governors in accordance with the Consumer Protection act.
Resale: Home that has had at least one owner.
Residential Lots: A piece of land or real estate used for private housing.
Residential Service Contracts: An insurance policy that covers repairs to specified parts of a house for a specific period. Also see Home Warranty.

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Sales Agreement: A contract in which a seller agrees to sell and a buyer agrees to buy, under specific terms and conditions specified in writing and signed by both parties.  Also known as an Agreement of Sale, Contract of Purchase, or Purchase Agreement according to location or jurisdiction.
Seller Disclosure: A document that includes all pertinent information about the physical characteristics, conditions and other factors about the property that influence a buyer's decision.
Seller Representation: A sales professional agrees to place a seller's interests above all others in the transaction.
Seller's Agent: A licensed real estate sales professional who represents the seller of real estate.
Seller's Disclosure: A document that includes all pertinent information about the physical characteristics, conditions and other factors about the property that influence a buyer's decision.
Seller's Market: Market economy to the seller's advantage.  There is a greater supply of buyers than there are home for them to purchase.
Second Mortgage: A loan with a lien position less desirable than then the 1st.
Service Provider: A firm or company that provides one or more settlement services associated with buying or selling real property.
Settlement: A meeting where the sale of a property is finalized by the buyers and sellers signing certain documents to transfer the title of the property and paying closing costs.  Also see Closing or Closing Day.
Settlement Fee: Administrative fee charged by the person and/or company that closes the transaction.
Single-Family: Residential structure intended for use by one family.
Special Assessments: A tax or levy customarily imposed against only those specific parcels of real estate that benefit from a proposed public improvement like a street or sewer line.
State Tax Stamp: Tax charged when title passes from the seller to the buyer.
Status: A property stage subject to change.
Status Change: A property stage that has become different. For example, an Active Available property may have a status change to Pending or Sold after an offer to purchase is accepted by the buyer and seller.
Survey: A drawing or map of a property that shows the precise legal boundaries, location of improvements, rights of way, easements and other physical features.
Surveyor: Professional who performs a survey that determines the location, form and boundaries of property.

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Tax: An involuntary contribution for the support of a local, state, or federal government required of persons, groups, or businesses within the domain of that government.
Tax Certificates: Statements provided by a taxing authority showing that current taxes are paid.
Tenancy In Common:  A type of joint ownership of property by two or more persons with no right of survivorship.
Terms: Specific conditions associated with an agreement between parties.  Mortgage terms deal with payment amounts, payment intervals, length of the loan, how the loan is amortized and more.  Real estate contract terms deal with down payment, loan amount, total sales price and other conditions of the sale.
Title: A legal document that provides evidence of a person's right to or ownership of a property.
Title Company: A company that examines and insures titles to real estate.
Title Insurance: A policy that protects the lender (lender's policy) or the buyer (owner's policy) against loss arising from disputes over ownership of real property.
Title Search or Examination: A check of title records to ensure that the seller is the legal owner of the property and that there are no liens or other claims outstanding.
Townhouse: Typically a dwelling unit with two or more floors that is attached to other walls.
Transfer and Recordation Taxes: Taxes charged when title passes from seller to buyer.
Transfer Tax Stamps (Transfer Tax): Taxes charged when title passes from the seller to the buyer usually levied by the state and the county.
Trustee: A fiduciary that controls or holds real property for the benefit of another.

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Underwriter: Person or entity responsible for approving a borrower for a mortgage based on the assessment of the buyer's creditworthiness and risk for the lender.

VA Loan: A mortgage given to a veteran where the lender is insured against loss by the Veteran's Administration (VA).
Variable Rate Mortgage: A mortgage with an interest rate that is periodically adjusted by the lender based on a specified index.  Also known as a Adjustable Rate Mortgage.  Typically, these mortgage products start with a lower interest rate, then the interest rate may move up or down as market conditions and the index change.
Virtual Tours: An interactive photographic display of select interior and/or exterior views associated with real property that you can view using HutHound.com.
 

W2: Internal Revenue Service form where an employer reports income and taxes paid for an employee in a given year.

Walk-Through: Buyer inspection of the property before closing.

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